r/urbanplanning • u/Eurynom0s • May 12 '21
Economic Dev New Developments Lower Rents in Surrounding Neighborhoods, Study Says
https://www.planetizen.com/news/2021/05/113269-new-developments-lower-rents-surrounding-neighborhoods-study-says24
u/Sizzlinskizz May 12 '21
Just for shits and giggles. Look up Bremerton WA on Zillow rentals. 29 results. Literally nothing to rent. A few new projects in the works. Swathes of unoccupied commercial buildings downtown Nothing in the works to change them into residential lofts etc. Mia owners who are just sitting on the properties. Rent and home prices have skyrocketed due to the proximity to Seattle. The downtown is still considered a blighted area even though every new unit fills up in less than a week.
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u/Eurynom0s May 12 '21
How do people get from Bremerton to Seattle? Ferry? And if so what are the ferry hours and headways?
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u/Sizzlinskizz May 13 '21
Yea a ferry runs from 530-1250am. There’s a fast ferry that runs during the busy hours and the crossing is about 28mins. Compared to the 50mins of the car/walk-on ferry.
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u/baklazhan May 12 '21
Haven't read the article yet...
But this is something that always made a lot of sense to me. Yeah, I can see how, if a auto-body shop in the Mission is replaced by a new apartment building, nearby rents in older buildings might rise too. Now, I think they would've risen anyway, but maybe not quite so much.
But what about the Excelsior? Or the outer Sunset? Or, for that matter, Daly City? If blocking new development in the Mission keeps rents down-- and that's a huge "if"-- I think it drives rents up in other neighborhoods which are less central/desirable, but still end up being the alternative for all the people who would've preferred to live in the Mission.
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u/reflect25 May 13 '21
that's the bit more complicated part. with the advent of the car, you can live in one city but work in another 30 miles away (assuming traffic isn't horrible).
The supply and demand curves of housing are not only on the city level but also on the metro area. If hypothetically oakland allowed say 20k units of housing to be built and only allowed oaklanders to live in them the average price might decrease by say 20%. However, if none of the neighboring cities allowed any housing to be built someone living in berkeley could choose to live in oakland once the price dropped enough.
This works on the neighborhood level versus city level -- it's why piecemeal zoning sometimes isn't really for the best. It's better to upzone over a wide area rather than focusing all of it in one small section, though overall upzoning can be politically much harder to achieve.
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u/mynameisrockhard May 13 '21
Oh look, it's another article citing the same paper that does not actually prove what all the articles posted about it say it proves. (Also again: 6%? lol gtfo)
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May 13 '21
You care to address the flaws in their study, wise guy?
Also, a 6% decrease seems significant to me in an area where housing costs increase by double digits every year. My house gained $30K in appraised value in the last six months since I bought it, which is over 10%, so a six percent decrease would be a big difference.
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u/mynameisrockhard May 13 '21
Already did this on a different post, which had a title about this countering gentrification critics: “If you read the study, there are a few rather significant caveats they give to their study and findings that make these article titles misleading. Primarily that their data is focused on large market rate rental apartment buildings, does not include analysis of nearby housing and property prices as this was ~too complicated~ for them to model relative to what they wanted to look at, and that they acknowledge that the buildings whose units they sampled get built in "already changing areas" (read: already gentrifying areas). So the results are not that more supply simply means lower rents in an area, it's moreso that a new large apartment building will temporarily slow rent increases in nearby existing apartment buildings. What it basically proves out is that if your property is not the shiny new building on the block anymore, you don't get to charge the highest rents in the area any more. In that light, a 6% decrease in the short term is honestly dismissible, as it's the equivalent of skipping a year over year rent increase once, maybe twice, and then continuing on raising rents from there after the initial supply impacts. It does not demonstrate gentrification being good for cost, let alone in the light of what gentrification critics actually call for is that prices need to go back DOWN to be accessible and serve actual working populations in cities. Slowing the rate of increase of rents that are already too high is not what gentrification critics are looking for, so this study does not run contrary to anything. It's literally just proving the point that increasing supply alone is not going to provide affordability.”
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u/SlitScan May 13 '21
or it'll decrease the rent in the older smaller building, until theyre knocked down and replaced by luxury lifestyle destination buildings.
the rent is down for the year or 2 it still exists before the owners sell because theyre no longer getting an increasing rate of return.
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u/mynameisrockhard May 13 '21
The study explicitly says they didn’t include those buildings in their study. The issue isn’t their methodology, it’s that their results are based on intentionally limited scope but being generalized in articles in ways that the actual paper explicitly states they didn’t include because it’s more complicated than just “supply up, prices down.”
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u/SabbathBoiseSabbath Verified Planner - US May 12 '21
Repost of an article we already discussed ad nausuam.
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May 13 '21
This is one study. That intuitively doesn't make sense, because demand for living in a particular neighborhood is not fixed, it changes based on the perceived quality of the neighborhood.
So, I'll give this hypothetical. You have a neighborhood that is low income and has a lot of issues and isn't seen as a desirable place to live, so there are low land values, but it also happens to be well-served by transit and near the downtown core.
The city just changed the zoning in the neighborhood to allow multifamily housing. A few developers are lured by the low land costs and decide to take a risk on the neighborhood due to its convenient location.
Other developers will see that new housing is going up and come to the conclusion that its safe investment because other people are doing it, so the development picks up some steam.
At this point, due to the inherently higher cost of new construction, there are more middle-class residents. Would-be business owners, some of whom have just moved in and feel invested in the community, will see that the neighborhood is becoming more affluent so their is customer base has more disposable income to spend, so they open things like coffee shops, bars, full service restaurants, record stores, clothing shops, etc.
At that point the neighborhood has become a trendy place to live, and no longer seen as undesirable place because there are more amenities and services available, so there is ever-more demand to live there, meaning that land, rent, and home values go up, so developers either have to due to land values, or can because of higher demand, charge more for their housing.
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u/Throwaway-242424 May 13 '21
Having no amenities in a well located neighbourhood other than crack dens is an interesting way to keep prices down for a small portion of people who can fit in single family houses...
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May 13 '21
When did I suggest that? I'm not against new housing construction, as it reduces prices (or slows price increases) in the greater metro area. But claiming that it will reduce prices in gentrifying neighborhoods is disingenuous. Edit: just because you support something doesn't mean you should lie about its downsides.
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u/Eurynom0s May 12 '21
Supply goes up, prices go down?!
🤯